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1.An increase in a nation's financial liabilities to foreign residents is a:
A.r eserve inflow.
B.r eserve outflow.
C.c apital imports.
D.c apital exports.
2.Which of the following is considered a capital inflow
A.A sale of . financial assets to a foreign buyer
B.A loan from a . bank to a foreign borrower
C.A purchase of foreign financial assets by a . buyer
D.A . citizen's repayment of a loan from a foreign bank
3.In a country's balance of payments, which of the following items will be recorded as a
debit entry
A.D omestic bank balances owned by foreigners are reduced
B.F oreign bank balances owned by domestic residents are reduced
C.A ssets owned by domestic residents are sold to nonresidents
D.S ecurities are sold by domestic residents to nonresidents
4.When a . resident increases her holdings of a foreign financial asset, this item is
recorded as a:
A.c redit entry in the . current account.
B.d ebit entry in the . current account.
C.c redit entry in the . capital account.
D.d ebit entry in the . capital account.
5.Which of the following would tend to contribute to a . current account surplus
A.T he United States makes a unilateral tariff reduction on imported goods.
B.T he United States cuts back on American military personnel stationed in Japan.
C.. tourists travel in large numbers to Asia.
D.R ussian vodka becomes increasingly popular in the United States.
6. A country experiencing a current account surplus:
A.n eeds to borrow internationally.
B.i s able to lend internationally.
C.m ust also have had a surplus in its overall payments balance.
D.s pends more than it earns on its merchandise and service trade, international income
payments and receipts and international transfers.
7. . A nation is considered to be a(n) _____ in the international market, if its current
account is in deficit.
A.i mporter
B.e xporter
C.b orrower
D.l ender
8. A nation is called a lender if:
A.i ts financial account is in deficit during a time period.
B.i ts current account is in surplus during a time period.
C.i ts current account is in deficit during a time period.
D.i ts net stock of foreign assets is positive.
9. A nation is called a creditor if:
A.i t provided financial assets to other countries.
B.i ts net stock of foreign assets is positive.
C.i ts current account is in surplus during a time period.
D.i ts current account is in deficit during a time period.